TURKMENISTAN'S HIGH DOMESTIC NATURAL GAS CONSUMPTION

UNCLAS SECTION 01 OF 02 ASHGABAT 001579 SENSITIVE SIPDIS STATE FOR SCA/CEN; EEB; NEA/IR ENERGY FOR EKIMOFF/BURPOE/COHEN COMMERCE FOR EHOUSE E.O. 12958: N/A TAGS: EPET PGOV EINV TX SUBJECT: TURKMENISTAN'S HIGH DOMESTIC NATURAL GAS CONSUMPTION ASHGABAT 00001579 001.2 OF 002 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: Turkmenistan has one of the highest per capita natural gas consumption rates in the world, which is quite unusual for a country with a population between five and six million and a generally undeveloped industrial sector. The main reasons for the high consumption rate are reportedly inefficient use of energy by industries and households, deteriorating local gas distribution networks, the general presumption of endless gas reserves, and the government's "free gas" policy. Although the inefficient use of natural gas raises concerns among industry experts, the GOTX has yet to develop a program to encourage energy efficiency. Public opinion on gas consumption is that the people of Turkmenistan have an inalienable right to use the natural resources of the country as they please. END SUMMARY. ¶3. (SBU) Turkmenistan's natural gas consumption has almost doubled over the last decade and is now about 20 billion cubic meters (bcm) per year, which brings the per capita consumption to approximately 4,000 cubic meters per person annually. The sharp increase in natural gas consumption can be explained by the increased number of electric power stations that utilize natural gas to produce electricity. The Turkmen Government has built four new power stations since the mid 90s with a total capacity of 880 megawatt-hours. Although the new power stations reportedly have good energy efficiency features, the GOTX chooses to light not only minor streets, but also the exteriors of all new public and residential buildings, which remain illuminated all night long, giving Ashgabat a Las Vegas-esque quality. ¶4. (SBU) Moreover, according to a former employee of the Ministry of Energy, the Mary power station, which is the largest such facility in the country and the largest consumer of natural gas, produces electricity at a very low efficiency rate, due to the poor condition of the station's equipment. Of the station's eight power-generating units, only one unit was renovated in 2006, and the other seven consume more gas than they would consume if they were properly maintained. ¶5. (SBU) Turkmen citizens have been getting natural gas for their households free-of-charge since 1993, which has resulted in increased and inefficient consumption at the household level as well. Moreover, people residing in rural areas have taken advantage of free natural gas to develop greenhouse agriculture production. They build greenhouses at their plots of land and use natural gas, which they receive free-of-charge for their household, to heat their greenhouses by directly burning natural gas in greenhouses instead of installing steam heating systems that are more energy-efficient, but are expensive. ¶6. (SBU) In general, people believe that they do not get much benefit from natural gas exports, which are the main source of revenue for the Turkmen government. As a result, they feel entitled to use as much free gas as they want. Also, many Turkmen assume that natural gas reserves are an endless resource. The GOTX regularly fuels this assumption stating that natural gas reserves will last for hundreds of years. Nevertheless, during severe winters, some rural areas have reported shortages of natural gas caused by high export demands and leaks from distribution networks. ¶7. (SBU) Deteriorating local gas distribution networks, which service more than 90 percent of the population, also contribute to increased gas consumption. Most of the gas distribution networks servicing rural areas were built in the late 80s and early 90s and have seen very little of ASHGABAT 00001579 002.2 OF 002 maintenance since that time. As a result, gas leaks are reportedly common throughout the local distribution system and can lead to significant losses. The GOTX has contributed little toward upgrading local distribution networks, reportedly because they are not crucial for revenue-generating exports. ¶8. (SBU) COMMENT: Turkmenistan's domestic natural gas consumption is set to grow in the short and mid-term. Consumption growth will be driven by the GOTX's plans to increase electricity production through the construction of new power plants and upgrading existing ones. At the same time, the inefficient use of natural gas by the public has been exacerbated by the notion that, for many people, free gas in their homes is the only tangible benefit they see in a country that has abundant natural gas. END COMMENT. ECKSTROM